Highlights:

– Judge rules Google may continue paying Apple for default search placement on iPhones.
– Decision preserves Apple’s lucrative services revenue and Google’s search dominance.
– Tech sector broadly lifted as ruling eases risk of structural remedies.

Apple shares rose on Wednesday after a U.S. federal judge allowed Google to maintain its long-standing preload agreements with Apple and other device makers, enabling its search engine to remain the default on mobile browsers. The decision, closely watched by regulators and investors, provides stability for two of the world’s largest technology companies and signals a more measured approach to antitrust enforcement in digital markets.

Regulatory Challenge and Market Impact

The Department of Justice argued that Google’s payments to Apple—estimated between $18 billion and $20 billion annually—created anti-competitive barriers by discouraging consumer choice and locking rivals out of the search market. Prosecutors had sought to block these agreements, contending that they unfairly reinforced Google’s 90% market share in search.

Judge Amit Mehta, however, ruled that the preload deals did not meet the legal threshold for prohibition, noting that consumers could still manually switch search providers. The judgment removes the immediate risk of a structural shift in how search engines are distributed and signals that courts may prefer behavioral remedies to sweeping breakups. For markets, the ruling reduces legal uncertainty around two of the most heavily scrutinized companies in the world.

Financial Implications for Apple and Google

For Apple, the outcome secures one of its most profitable revenue streams. The company’s services division—driven in part by Google’s licensing payments—generated $23.1 billion last quarter, accounting for nearly a quarter of its overall revenue. With hardware sales growth slowing, these high-margin recurring revenues are increasingly central to Apple’s valuation and long-term strategy.

For Alphabet, retaining default status on Apple devices is critical to its advertising model. iPhones hold more than 50% of the U.S. smartphone market, making Apple a key gateway to billions in search advertising revenue. Losing that position could have eroded Google’s \$60 billion-plus quarterly ad business. The ruling therefore reinforces the stability of Alphabet’s core operations even as it faces mounting scrutiny in other jurisdictions.

Broader Tech and Investor Reactions

Apple shares gained modestly after the ruling, while Alphabet stock also advanced. The decision rippled across technology indices, with investors interpreting the outcome as evidence that U.S. courts may be reluctant to impose aggressive structural remedies on Big Tech. Still, analysts cautioned that ongoing oversight in both the U.S. and Europe could result in new compliance costs or restrictions.

The European Union’s Digital Markets Act, for example, already requires Apple and Google to provide easier options for consumers to switch default services, signaling that regulatory headwinds remain strong outside the U.S. For Israeli investors, the case underscores the global nature of regulatory risk in the tech sector, which heavily influences the Tel Aviv Stock Exchange given its strong technology weighting.

Looking ahead, investors will monitor whether regulators pivot to narrower remedies, such as mandating clearer alternatives for users or imposing stricter transparency rules on search deals. While the ruling delivers short-term stability for Apple and Google, the broader debate over digital competition and consumer choice is set to intensify across global jurisdictions.